In accounting, the double down method is a type of depreciation schedule. Depreciation is the act of amortizing large expenses across the useful life of the asset. Accounting principles require that value match cost whenever possible, so while a business may buy an asset with cash outright, it will depreciate that expense over the years the asset is used. One method of such accounting is the double down schedule, which weighs depreciation toward the start of the asset's life span.

Double Down Method

The straight-line depreciation method splits the cost of the asset into equal parts, a percentage accounted for each year. The double down or double declining method takes this equal percentage and doubles it, then multiplies the recorded asset value by that doubled percentage each period. The effect is that most of the depreciation expense is moved into the first few years of the product's lifespan, and it allows only a minimal recording of expenses by the end of the schedule.

Deferred Income Amounts

A reason to use the double down method is that the business can plan for higher income numbers later on in the lifecycle of the asset. If the business has to record depreciation expenses, these expenses will lower how net income appears to outside observers, even if net income itself is relatively stable. Using the double down method allows companies to prepare for an upcoming period they believe will already lead to low earnings. By the time low earnings arrive, depreciation expenses will be small and offset the lower figures.

Different Books

The double down method also allows a business to keep different sets of books based on what it wants to show. For example, it could use the straight-line method on the books that investors see in order to balance out expenses and stabilize income reports, while using the double down method for the IRS to control what income taxes are paid on. This is legal and is a common way for businesses to manage what people see versus what taxes they pay.

Accelerated Options

The double down method is accepted for many assets, but if the business is planning on using it only for tax purposes, the IRS allows a very similar method known as accelerated depreciation. The business must use depreciation charts created for this method that carefully plot out percentages for an assigned number of years, but the benefits remain the same.